Comments on: California Housing Market Forecasting Errors. Making Million Dollar Mistakes and Predicting the Future. 12 Percent of Mortgages with Balances Higher than 1 Million Dollars are now 90 days late. http://www.doctorhousingbubble.com/california-housing-market-forecasting-errors-making-million-dollar-mistakes-and-predicting-the-future-12-percent-of-mortgages-with-balances-higher-than-1-million-dollars-are-now-90-days-late/ How I Learned to Love Southern California and Forget the Housing Bubble Sat, 31 Jul 2010 22:55:07 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Pat McGroin http://www.doctorhousingbubble.com/california-housing-market-forecasting-errors-making-million-dollar-mistakes-and-predicting-the-future-12-percent-of-mortgages-with-balances-higher-than-1-million-dollars-are-now-90-days-late/comment-page-1/#comment-44194 Pat McGroin Sat, 16 Jan 2010 18:41:09 +0000 http://www.doctorhousingbubble.com/?p=2830#comment-44194 "This is really where I find it hard to see any major price jumps for California housing. How can we predict housing gains when unemployment is still near its peak? " Well, this is yet another variable in the equation...and where one would need to be able to PREDICT whether we are indeed at the unemployment rate peak (and, therefore, would begin to see the unemployment rate start going down). This may, in fact, be an argument that those who believe that "it's a good tie to buy" might use. However, I would imagine that the possibility (likelihood?) of further cuts in municipal and state work forces could keep downward pressure on home prices. Also, along with those cuts in municipal employees, one would expect concomitant cuts in municipal services...necessitating additional cash outlays by the average homeowner (i.e., higher HOA fees, in CA) to make up for these cuts. As you say, though...it's not easy to PREDICT economic trends. “This is really where I find it hard to see any major price jumps for California housing. How can we predict housing gains when unemployment is still near its peak? ”

Well, this is yet another variable in the equation…and where one would need to be able to PREDICT whether we are indeed at the unemployment rate peak (and, therefore, would begin to see the unemployment rate start going down). This may, in fact, be an argument that those who believe that “it’s a good tie to buy” might use. However, I would imagine that the possibility (likelihood?) of further cuts in municipal and state work forces could keep downward pressure on home prices. Also, along with those cuts in municipal employees, one would expect concomitant cuts in municipal services…necessitating additional cash outlays by the average homeowner (i.e., higher HOA fees, in CA) to make up for these cuts.

As you say, though…it’s not easy to PREDICT economic trends.

]]> By: EDD sucks http://www.doctorhousingbubble.com/california-housing-market-forecasting-errors-making-million-dollar-mistakes-and-predicting-the-future-12-percent-of-mortgages-with-balances-higher-than-1-million-dollars-are-now-90-days-late/comment-page-1/#comment-43771 EDD sucks Sun, 03 Jan 2010 08:35:10 +0000 http://www.doctorhousingbubble.com/?p=2830#comment-43771 Just so you know... It appears EDD has begun denying all unemployment claims without even calling the claimant. My fiancee got fired for a shady reason... she made a mistake on her timecard once...(lunch was off by 30 minutes or so). And she got fired for "falsification of documents"... along with 40% of her department on the same day. the company has not tried to hire any new employees since the mass firings. EDD didn't even call my fiancee... they just denied her benefits automatically. We are appealing... since her firing is not misconduct by definition. Misconduct has to be INTENTIONAL.. and they can't prove intent. A mistake is incompetence and by EDD rules you are entitled to unemployment. They are just hoping people don't appeal... and tying up the appeals in court. It's a nightmare scenario. Employers are resorting to firings instead of layoffs... to save on paying rising unemployment insurance premiums and EDD is complicit in allowing them to do so unethically. If she doesn't get a fair appeal we are going to the local news media outlets.. blogosphere, youtube... and plan on making lots of noise. Unemployment is much higher than the numbers show.... I personally know 8 people who are unemployed and being denied unemployment for shady reasons. Just so you know… It appears EDD has begun denying all unemployment claims without even calling the claimant. My fiancee got fired for a shady reason… she made a mistake on her timecard once…(lunch was off by 30 minutes or so). And she got fired for “falsification of documents”… along with 40% of her department on the same day. the company has not tried to hire any new employees since the mass firings. EDD didn’t even call my fiancee… they just denied her benefits automatically. We are appealing… since her firing is not misconduct by definition. Misconduct has to be INTENTIONAL.. and they can’t prove intent. A mistake is incompetence and by EDD rules you are entitled to unemployment. They are just hoping people don’t appeal… and tying up the appeals in court. It’s a nightmare scenario. Employers are resorting to firings instead of layoffs… to save on paying rising unemployment insurance premiums and EDD is complicit in allowing them to do so unethically. If she doesn’t get a fair appeal we are going to the local news media outlets.. blogosphere, youtube… and plan on making lots of noise.

Unemployment is much higher than the numbers show…. I personally know 8 people who are unemployed and being denied unemployment for shady reasons.

]]> By: Xiaomi http://www.doctorhousingbubble.com/california-housing-market-forecasting-errors-making-million-dollar-mistakes-and-predicting-the-future-12-percent-of-mortgages-with-balances-higher-than-1-million-dollars-are-now-90-days-late/comment-page-1/#comment-43770 Xiaomi Sun, 03 Jan 2010 08:33:11 +0000 http://www.doctorhousingbubble.com/?p=2830#comment-43770 What happens when LT rates i.e 10 year bond rates rise due to high US gov issuance? Seems to be the a rise in mortrgage rates from 5% to 6% would imply a 10-15% drop in house prices ceteris paribus and trigger another self-reinforcing liquidation cycle. The Vegas phenomenon where enough people are under water than the societal attitude towards walking away from loans completely shifts to paying off a mortgage that is underwater as a sucker bet is not too far away for large parts of CA. What happens when LT rates i.e 10 year bond rates rise due to high US gov issuance? Seems to be the a rise in mortrgage rates from 5% to 6% would imply a 10-15% drop in house prices ceteris paribus and trigger another self-reinforcing liquidation cycle. The Vegas phenomenon where enough people are under water than the societal attitude towards walking away from loans completely shifts to paying off a mortgage that is underwater as a sucker bet is not too far away for large parts of CA.

]]> By: Xiaomi http://www.doctorhousingbubble.com/california-housing-market-forecasting-errors-making-million-dollar-mistakes-and-predicting-the-future-12-percent-of-mortgages-with-balances-higher-than-1-million-dollars-are-now-90-days-late/comment-page-1/#comment-43769 Xiaomi Sun, 03 Jan 2010 08:19:40 +0000 http://www.doctorhousingbubble.com/?p=2830#comment-43769 Love the blog, fundamental insights are right on the mark and supported with a lot more real-world stats than most I-Bank research I see. Unofrutnately the I-Bank rsch I beleive in currently forecasts long-term i.e. 10-year treasury rates to rise to 5.0% by end-10 (which implies mortgage rates of 6.5%). Admitedly, what everyone is trying to figure out is the new true equilibrium of LT interest rates (both nomial and real) post the huge increase in deficits. We were shielded by this in 2009 by quantitative easing i.e. the Fed buying the equivalent of the deficit in mortgage backed securities. In theory, the degree of deflationary pressues on the economy (like the obvious point that there is no need to build new residential or commercial reale state for a long-time to come) should mean that forward-looking inflation expectations remain low as does the alternative use of funds due to a lack of inv opps in the economy. There is a lot of genuine uncertainty on where rates are going. It seems to me if mortgage rates get north of 6% again in 2010, housing prices will sink at least another 10-15% in 2011 and another self-reinforcing liquidation cycle will emerge. That could eventually put large parts of CA in a Las Vegas type situation where virtually everyone begins to consider walking away from their homes as credit-ratingd are not worth the 200K-500K hit over the ntext 10 years to maintain them. The follow-on next iteration of gov aid and money printing would probably undermine all hope that the current level of deficits are cyclically high and can be managd lower over 5 years. When that # becomes 10 years, see the Chinese and their 1 trillion hoard of treasuries run.... Love the blog, fundamental insights are right on the mark and supported with a lot more real-world stats than most I-Bank research I see.

Unofrutnately the I-Bank rsch I beleive in currently forecasts long-term i.e. 10-year treasury rates to rise to 5.0% by end-10 (which implies mortgage rates of 6.5%). Admitedly, what everyone is trying to figure out is the new true equilibrium of LT interest rates (both nomial and real) post the huge increase in deficits. We were shielded by this in 2009 by quantitative easing i.e. the Fed buying the equivalent of the deficit in mortgage backed securities. In theory, the degree of deflationary pressues on the economy (like the obvious point that there is no need to build new residential or commercial reale state for a long-time to come) should mean that forward-looking inflation expectations remain low as does the alternative use of funds due to a lack of inv opps in the economy. There is a lot of genuine uncertainty on where rates are going. It seems to me if mortgage rates get north of 6% again in 2010, housing prices will sink at least another 10-15% in 2011 and another self-reinforcing liquidation cycle will emerge. That could eventually put large parts of CA in a Las Vegas type situation where virtually everyone begins to consider walking away from their homes as credit-ratingd are not worth the 200K-500K hit over the ntext 10 years to maintain them. The follow-on next iteration of gov aid and money printing would probably undermine all hope that the current level of deficits are cyclically high and can be managd lower over 5 years. When that # becomes 10 years, see the Chinese and their 1 trillion hoard of treasuries run….

]]> By: St Alphonzo http://www.doctorhousingbubble.com/california-housing-market-forecasting-errors-making-million-dollar-mistakes-and-predicting-the-future-12-percent-of-mortgages-with-balances-higher-than-1-million-dollars-are-now-90-days-late/comment-page-1/#comment-43759 St Alphonzo Sat, 02 Jan 2010 10:43:28 +0000 http://www.doctorhousingbubble.com/?p=2830#comment-43759 @CompaJD Unfotunately, you may want to be careful what you hope for. Prices may come down at the point of capitulation, where the destruction that wasteth at noon day may be the result of the situation fracturing into a scenario where you may not want to own a house in the twilight zone. If the Politbeaurea can keep the charade up this long, than they will continue--until they can't. Then prices may not tinkle down the next time--it may be all out war, with a truly chaotic crash. Or not. If the free market had been working, none of this would have occurred. Obviously USGov will not take any measure off the table to let the crony system fail. Don't expect normal market operations to correct this. Only the next big wave will, and as DHB has pointed out, it will likely be Alt-A, Option Arm, Jumbo, and conventional due to job loss and debt reckoning--all at once. Kicking the can down the road is a dead-end street. And CA is on the street of broken dreams. You may pull the rest of us down with you. @CompaJD
Unfotunately, you may want to be careful what you hope for. Prices may come down at the point of capitulation, where the destruction that wasteth at noon day may be the result of the situation fracturing into a scenario where you may not want to own a house in the twilight zone. If the Politbeaurea can keep the charade up this long, than they will continue–until they can’t. Then prices may not tinkle down the next time–it may be all out war, with a truly chaotic crash. Or not. If the free market had been working, none of this would have occurred. Obviously USGov will not take any measure off the table to let the crony system fail. Don’t expect normal market operations to correct this. Only the next big wave will, and as DHB has pointed out, it will likely be Alt-A, Option Arm, Jumbo, and conventional due to job loss and debt reckoning–all at once. Kicking the can down the road is a dead-end street. And CA is on the street of broken dreams. You may pull the rest of us down with you.

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